Stockholders' Equity

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

During the second quarter of 2015, the Company commenced a rights offering and distributed one non-transferable subscription right for every four shares of common stock owned by its shareholders of record at the close of business on May 26, 2015. Each right entitled its holder to subscribe for one share of common stock at a price of $5.75 per share. Additionally, the Company allocated an additional 1,337,686 shares to honor over-subscription requests. The rights offering was over-subscribed and the Company issued 6,688,433 shares of common stock.

The Company has reserved an aggregate of 2,700,000 shares of common stock under its Omnibus Plan, of which 774,394 options to purchase shares of common stock granted to existing employees were outstanding as of September 30, 2015, and 103,112 shares of restricted stock had been granted to directors under the plan with 41,259 shares subject to vesting.

During 2014, upon receipt of shareholder approval, the Company reclassified the embedded derivative contained in its Convertible Notes to stockholders’ equity along with unamortized transaction costs proportionate to the allocation of the initial debt discount and the principal amount of the Convertible Notes. This resulted in an increase to additional paid-in-capital of $14.1 million, net of taxes on the Company’s consolidated balance sheet and consolidated statement of stockholders’ equity as of December 31, 2014. See Note 11, "8.50% Senior Unsecured Convertible Notes."

In connection with the settlement of derivative litigation, the Company issued 125,628 shares of the Company’s stock, which were issued in the first quarter of 2014 and are included in stockholders’ equity.

In connection with the settlement of class litigation filing in connection with the USAO Investigation, the Company issued warrants to purchase two million shares of the Company’s stock into an escrow account in April 2014 and were distributed in October 2014. The estimated fair value at the measurement date of such warrants was $5.4 million, which is included in stockholder’s equity. The warrants have a five-year term from the date of their distribution with an exercise price of $10.75. The Company is obligated to file a registration statement to register the shares underlying the warrants with the SEC if shares of the Company’s common stock have an average daily trading closing price of at least $8.50 per share for a 45 day period. The warrants will be exercisable upon effectiveness of the registration statement.

During 2014, the Company awarded 323,500 target performance shares for restricted common stock to its directors and certain employees, of which 150,000 shares were subject to shareholder approval of the Omnibus Plan, which was obtained at the Company’s 2015 annual meeting on May 28, 2015. The issuance of the performance shares is contingent on the Company’s financial performance as well as the performance of the Company’s common stock through June 30, 2016, with the actual shares to be issued ranging between 0% – 150% of the target performance shares. As a result, the Company determined that it is not probable that the performance conditions will be achieved and no related expense was recognized for the three months and nine months periods ended September 30, 2015. The performance shares will be subject to a one year vesting period from the date of issuance.

Exclusive of the 323,500 target performance shares awarded to its directors, named executive officers and certain employees, there were 1,808,735 securities remaining for future issuance under the Omnibus Plan as of September 30, 2015.

During the nine months ended September 30, 2014, the Company adopted ASU No. 2013-11, resulting in an increase to additional paid-in-capital of $6.3 million on the Company’s consolidated balance sheet and consolidated statement of stockholders’ equity as of September 30, 2014. See Note 17, "Income Taxes."

On September 1, 2015, the Company announced that its Board of Directors authorized a $10 million share and note repurchase program. The program has a two-year expiration date, and authorizes the Company to repurchase up to $10 million of its common stock and/or its Convertible Notes due 2019. For the quarter ended September 30, 2015, the Company purchased 65,621 shares for a total cost of approximately $348,000, which is an average cost of $5.30 per share including transaction fees. As of September 30, 2015, the Company may purchase up to approximately $9.7 million of additional common stock or Convertible Notes under its board authorized plan.